Marketing to Focus on Basics in 2010

Two annual rituals in our culture are identifying the top events or trends of the past year and predicting events or trends for the upcoming year. The marketing industry gets in on these rituals, too. One effort to predict future marketing trends was undertaken by Duke University’s Fuqua School of Business. In a survey of Chief Marketing Officers in August of this year, CMOs identified areas in which they planned to increase marketing spending in 2010.

Findings from the Duke survey reveal CMOs will focus spending in areas that will strengthen customer relationships and deliver measurable results. The area with the highest growth will be spending for online marketing programs, with an average increase of 9.5% expected. The second and third areas are new product and new service introductions, with spending growth expected to be around 9.3% and 6.7%, respectively. Spending on customer relationship management (up 6.4%) and brand building (up 4.5%) round out the top five areas for marketing expenditure growth.

Two implications arise from the survey of CMOs. First, the projected increases for new products and new services suggest companies are willing to take risks in rolling out new offerings. This trend could be a signal of a stronger economy. Second, spending on traditional media advertising continues to have a diminished role in many marketing programs. The desire for customer engagement and performance tracking has led marketing spending into areas such as social media, search engine advertising, and customer relationship management. Mass media advertising will not go away, but for many brands it has been unseated as the primary marketing channel.

eMarketer – “Seven Predictions for 2010 from eMarketer’s CEO”

The Tiger (Negative) Effect

I blew this one. In a blog post on December 1, I maintained that Tiger Woods’ value as a celebrity endorser would likely be impacted little by the fallout triggered by his traffic accident on Thanksgiving morning. That assertion was based on an assumption that his transgressions were limited in scope. We have since come to learn otherwise!

Now that Tiger has announced an indefinite leave from golf and the PGA Tour, sorting out the damage done becomes a bit easier. Three parties hurt by this situation are:

3. Tiger’s sponsors – Companies that have Woods under contract as an endorser are having to deal with the embarrassment of the situation, but their brands stand for more than Tiger Woods. The more heavily invested a company’s marketing platform is in Woods, the greater it will be hurt. Accenture is a sponsor whose marketing is heavily linked with Woods. On the other hand, Gillette has many other endorsers that it can shift focus toward and minimize its association with Tiger Woods if it chooses.

2. Tiger Woods – His brand image and reputation have taken serious hits, but not before raking in hundreds of millions of dollars in endorsement earnings. And, there is the opportunity for redemption. While his brand equity in the marketplace may never return to pre-scandal heights, there is potential to remain a viable brand.

1. PGA and golf in general – The biggest loser is the PGA Tour. We have seen glimpses of what a Tiger-less PGA Tour is like when he missed time following knee surgery. TV ratings drop and event attendance declines. While some events hold star power such as The Masters and U.S. Open, many tour stops benefit from Tiger Woods being in the field.

Let’s hope Tiger Woods makes a comeback. He’s good for golf, but more importantly, his return to golf would signal progress in rehabbing problems in his personal life.

Cyber Monday Emails: Poster Child for Message Clutter

Message clutter is a problem marketers deal with in many communication channels. Traditional media such as TV, radio, newspapers, and magazines are plagued by a high volume of ad messages vying for consumers’ attention. The action has moved to interactive and new media, too. A prime example is e-mail, a channel that experienced a significant clutter-triggered problem on Cyber Monday.

It is logical that online businesses would seek to capitalize on the large number of web surfers and shoppers on Cyber Monday. So, why not appeal to consumers via e-mail campaigns in an effort to drive them to your web site? Individually, it is a great strategy. Collectively, it led to congestion in e-mail delivery that hurt delivery rates. According to research by Pivotal Veracity, about 76%
of all e-mail campaign messages sent by marketers on Cyber Monday reached inboxes. That figure compares with delivery rates that typically range from 80 to 90% or higher.

What should e-mail marketers do? Forget about executing Cyber Monday e-mail campaigns? Not hardly! The stakes are too high in terms of number of prospective customers. But, the approach to luring traffic on Cyber Monday has to change. The Pivotal Veracity research found that the most popular time for marketers to send e-mail was noon to 1:00 PM on Cyber Monday. It seems that timing of messages should reach online shoppers early enough that they are aware of a seller’s Cyber Monday promotions in advance of the big day. Just as Black Friday deals seem to be publicized earlier each year, online sellers will benefit by spreading the word about Cyber Monday before the big day. Otherwise, e-mails will suffer a worse fate than message clutter: they may never have a chance to be ignored.

ClickZ – “E-Mail Deliverability Suffered on Cyber Monday”

Tiger Woods’ Endorser Value Likely Unchanged

News of a traffic accident involving Tiger Woods created concern, followed by curiosity about how and why Woods had a wreck in the early hours of November 27. While there is a great deal of speculation about what happened, speculation that better fits the content of gossip web sites than a marketing blog, there seems to be little evidence that the episode will negatively impact Tiger Woods, endorser extraordinaire. So far, sponsors have agreed with Woods’ assertion that the incident is a private matter and have largely stayed out of the situation.

Unless revelations of inappropriate behavior by Tiger Woods surface, the fallout from his accident on his endorsement potential will be minimal. Tiger has built tremendous brand equity through years of superior play and consistency as a product endorser. The image of Tiger Woods is largely positive, and while embarrassing details could emerge that change the way some people view him, Tiger Woods will continue to be an effective endorser. Americans have a short memory and forgiving heart when it comes to their heroes. I believe Tiger Woods’ situation will benefit from those characteristics of the American public.

Marketing Daily – “Brands Line Up Behind Tiger: ‘Private Matter'”

Celebrity Endorsers Influence Buying Decisions… Occasionally

Celebrity endorsements can move a brand from relative obscurity to greater awareness among consumers and increased buzz in the marketplace. But, which types of celebrities resonate as effective endorsers? According to a recent Adweek Media/Harris Poll, business leaders and professional athletes have the greatest impact. Not surprisingly, consumers view business leaders as the most persuasive (37% cited business leaders). Their expertise in business gives them a high level of credibility when endorsing products.

Enlisting professional athletes as product endorsers is a practice that spans several decades, and consumers still seem to be receptive to famous athletes hawking products (21% said athletes were most persuasive endorser). Acceptance of athlete endorsers was highest among persons ages 18-34, with 24% of that segment indicating athletes were the most persuasive type of endorser. In contrast, only 13% of the sample said athletes were the least persuasive endorser type, with business leaders being the only type with a lower percentage (11%).

Why do pro athletes go over well as product endorsers? First, many of them are well known. Their familiarity helps create awareness for the brands that hired them. Second, they are often admired by sports fans. The image people hold for Peyton Manning or Tiger Woods can influence the image held for brands endorsed by these premier athletes. Creation of a favorable brand image sets the stage for responses by consumers that could ultimately include product purchase.

Despite the warm and fuzzy feelings pro athletes might create, the reality is that endorsement advertising impacts a relatively small percentage of the overall audience. The Adweek/Harris study found that 80% of persons surveyed are not swayed by the presence of celebrities in ads. The implication of this finding is that marketers must understand celebrity endorsements are not the answer for every brand. We return to a basic tenet of marketing: know thy customer. Will your target market be persuaded in some way by your brand’s association with a celebrity? Moreover, is it worth the investment required to sign a celebrity? If the answer to either question is “no,” hiring a celebrity endorser is not the appropriate strategy.

Center for Media Research – “Endorsements Are a Mixed Bag”

Digital Billboards: Value Added or Villain?

Digital billboards quickly came under attack after showing up on the landscape. A primary criticism of digital billboards is that they are unsafe in that they will distract drivers and cause traffic accidents. That assertion is based on… well, what is it based on? I suppose it is considered another distraction and potential accident source just like eating, applying make-up, or talking on a cell phone (my personal favorite was told to me recently by a friend – he saw someone playing a trumpet while driving). If digital billboards are banned before they gain widespread adoption, there will be one less problem on the roads.

You may want to put the brakes on that assumption. According to a study by Tantala Associates commissioned by the Outdoor Advertising Association of America, a study of the relationship between digital billboards and traffic accidents in the Cleveland, Ohio area found no indication that the signs led to more accidents. The study marked the third such effort, with previous studies in Rochester, New York and Cleveland yielding similar results.

Digital billboards offer many advantages over their poster predecessors. Messages can be rotated frequently, changes or additions to messages can be made easily, and they can even prompt immediate action. My wife noticed a digital billboard in Nashville for a country music station. The message included information about the song on the air at that time. Sure enough, a quick check of the radio dial confirmed that the song was playing.

If digital billboards possess advantages over poster billboards, why is there opposition to them? It is likely that it is more of an aesthetics issue than a safety issue. Most opponents may simply not want these big, bright displays being a part of the local landscape. Citing safety concerns may be the cover for the negative image that billboards have long suffered. But, if digital billboards are more attractive (they will not peel or show effects of harsh weather) and potentially more beneficial for advertisers and the community (having the ability to post info on a missing person, for example), let’s hope that persons involved making decisions about billboard placement will recognize the value they can add.

Digital Outsider – “Study: DO Billboards Are Safe, Really”

What’s Behind Costco’s Power Struggle with Coca-Cola?

Costco finds itself embroiled in a pricing dispute with Coca-Cola. Unhappy with pricing the beverage giant is giving the warehouse club chain, Costco has responded by not restocking Coke products on its shelves. The company has taken its dispute public, saying “At this time, Coca-Cola has not provided Costco with competitive pricing so that we may pass along the value our members deserve.”

What is Costco up to by publicly calling out Coca-Cola on its unwillingness to negotiate more favorable prices? This move would seem to allow Costco to score points with consumers. After all, all customers want lower prices for products. Costco is portraying itself as champion for its customers, doing battle with a corporate giant like Coca-Cola. Beyond gaining favorable publicity for calling for better pricing from a supplier, there may be little benefit of such a move long-term.

Costco may have picked the wrong brand to battle. Coca-Cola is a high equity brand. It has more leverage in the marketplace than Costco. Customers who are unable to buy Coke products at Costco will likely make their purchases at another store. How does that help Costco? Coca-Cola has profit responsibilities to its stakeholders, and it is resisting efforts by one of its customers to alter its business strategy. Manufacturers have been pushed around a great deal by retailers in recent years. It will be interesting to see how, or if, Coca-Cola pushes back in its feud with Costco.

Comcast.net – “Costco Nixes Coke Products Over Pricing Dispute”

Bite The Search Engine That Feeds You?

News Corp. Chairman Rupert Murdoch is leading the call for online media organizations to refrain from giving away its content. In particular, Murdoch views content from his company’s The Wall Street Journal as too valuable to let non-subscribers get articles and content from the newspaper. Murdoch has taken this stance to the point of removing all WSJ stories (and all stories from News Corp. publications) from Google’s search engine index. If you want it, you have to buy it- no free access.

This move is the latest chapter in a debate that is almost as old as the commercial Internet itself. People pay for newspaper and magazine content in print form, so why should expectations change when it comes to the online channel? The News Corp. decision to remove stories from Google’s search index adds a new chapter to the debate. News Corp. seems to be overlooking the fact that a significant percentage (25%) of traffic to wsj.com each day comes via Google. Moreover, 44% of site visitors coming through Google have not visited the site within the past 30 days. In other words, Google is driving a sizable percentage of unique views to wsj.com.

Charging for content delivered online, particularly from an esteemed publication like The Wall Street Journal, is a reasonable strategy. Not all media companies have the clout with consumers to charge for content, but News Corp. does possess such a brand in wsj.com. However, making wsj.com content unaccessible through Google searches seems to be based on outdated thinking. Today’s Web is about being open, and while News Corp. has a brand worthy of charging for online content, its new search engine policy is too restrictive and misses the opportunity to engage prospective subscribers.

Online Media Daily – “To Be Free, Or Not Be Free, Murdoch May Find Out: 25% of Journal’s Traffic Comes from Google“

Don’t Overlook Creative When Planning Online Ad Campaigns

Bad creative for online ads may render online campaigns less effective than not advertising at all. That conclusion comes from a Dynamic Logic study of online ad campaigns. Ad campaigns classified as among the top 20% in performance elevated their brands across all key metrics: brand and ad awareness, message association, brand favorability, and purchase intent. In contrast, campaigns in the bottom 20% of performance were associated with declines in all of the same key metrics.

It is a scary thought that a marketer would spend money to damage its brand. That was not the goal, of course, but the end result for those campaigns in the bottom 20% of performance was that the brand was worse off following the ad campaign. How could this happen? Online advertising often places a premium on planning considerations such as web site selection, ad size, placement on a page, and audience selection. While all of these decisions contribute to the success of an ad campaign, too, their effectiveness is hindered if the message turns off the target audience.

Online advertising represents a new channel for message placement. The communication process does not change. Effective encoding of messages so that the audience opts to pay attention, process information, and incorporate into their existing knowledge structures is still a must. Minimize the importance of creative in online ad campaign management at your own risk!

eMarketer – “Bad Campaign Worse than None at All”

Citizen Sponsorships: The Next Big Thing?

The U.S. speed skating team was in a bind. With the Vancouver Winter Olympics less than 100 days away, its team sponsor, Dutch bank DSB, exited its relationship with the team. No worries, Comedy Central talk show host Stephen Colbert comes to the rescue. He challenges his viewers, known as the Colbert Nation, to make donations online to support the team.

Is the grassroots sponsorship of the U.S. speed skating team a sign of things to come in sports sponsorship? The passion of sports fans could be tapped as a sponsorship revenue source, which would be timely given that many corporations have tightened marketing spending that is indirectly related to sales, like sponsorship often is. While Colbert’s gesture scores points for patriotism, it likely does not change the game of sponsorship. Does a sports property want to attempt to get a few dollars apiece from thousands of individual donors, or would it like to strategically align with a small number of sponsors with the resources to underwrite the property?

I believe the latter still applies. Citizen sponsorship would seem to have the best chance of success for niche sports properties, those that do not require substantial sponsor dollars and are typically shunned by traditional corporate sponsors. Hopefully, the exposure the U.S. speed skating team received from Steven Colbert will open the eyes of a corporate sponsor in time to help the team’s efforts in Vancouver.

Sponsorship.com – “Stephen Colbert Sponsors for America”